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Independents' Day

Pension issues create incentive for a third of GPs to refuse shifts, admits Government

Lack of flexibility in the current NHS pension system has created an incentive for swathes of GPs to cut their hours, the Government has said as it launches a review of the system.

The Department of Health and Social Care (DHSC) admitted that a third of GPs and consultants could be incentivised to refuse to take on extra shifts in a bid to avoid current pension tax charges.

Currently there is no flexibility in the amount of money NHS employees contribute towards their pension – with the highest earners being required to pay at least 14.5% of their salary.

In a consultation due to be launched today, the DHSC will set out the details of new proposals allowing doctors, including GPs, to control their pension contributions and avoid 'significant pension tax bills' that are issued once tax relief limits are breached.

The measures include:

  • Being able to choose a personalised pension growth level at the start of each tax year (1 April) and pay correspondingly lower contributions. The level chosen would be a percentage of the normal scheme contribution in 10% increments. For example, 50%, 30%, or 70% of the full accrual level.
  • Having the option to fine-tune their pension growth towards the end of the tax year when they are clearer on total earnings. This will allow them to ‘top-up’ their pension pot to the maximum amount without hitting their tapered annual allowance limit.
  • Where an individual has a large increase in pensionable pay, phasing over a number of years the amount by which the new pay level contributes towards their pension. This smooths any spike in pension growth that can cause sudden pensions tax charges

Today's proposals replace previous Government plans to introduce a 50:50 scheme in which doctors would have been able to halve their pension contributions and get half the rate of pension growth in return. 

Those plans were scrapped in favour of providing more flexibility in the level of pension contribution doctors can make - and also offering the possibility for employers to 'recycle' their contributions into the overall salary

Health and social care secretary Matt Hancock said today: 'I love the NHS – and our new plan means every senior clinician will be able to carry out life-saving work for patients safe in the knowledge they have more control over their pension, their future and their retirement than at any other point in NHS history.

'Today we’re taking a decisive step in fixing this issue for good so patients can feel the impact in GP surgeries and hospitals across England and we are already helping hospitals ease the immediate burden with new advice on action which can be taken now.

'To make sure we get this right, however, it is vital we learn from the experiences of our dedicated frontline staff, so I urge them to have their say.'

Health minister Chris Skidmore said: 'Nobody working for our NHS deserves to be penalised for caring for their patients or going above and beyond to provide out-of-hours care.

'We have listened to the concerns of our top clinicians and are taking decisive action today by empowering GPs, consultants and top nurses with newfound flexibility to balance their pensions with the demands of their vital front-line work.'

This comes after Simon Stevens warned that the Government proposals to make pensions more flexible are not enough to ensure the sustainability of GP services.

This article has been updated to reflect that GPs and consultants may be incentivised to not take on extra shifts by current pension rules, rather than have already refused extra work. 

Readers' comments (8)

  • Yah! Yah!

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  • Too little to late,most of us are actively planning an exit strategy.This will not address that, a continued net loss of 500 fte GPs a year will continue and the notable attrition rate in our local consultants will continue.Waiting lists will rise and the government will look like the prize twa@@ they are now.

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  • A sticking plaster for a ruptured AAA

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  • Exqcty as said by Turn Out and Decorum

    Yep very decisive Mr Hancock et al.

    Bexit on the horizon and the Government close down and do SFA.

    I doubt anyone from my era doesn't have a cunning plan and it 100% doesn't involve the NHS.

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  • I do not see why they need to waste time doing a consultation unless they want to screw us more. Do more work and get poorer and more penalized. No idiot will want that.
    The suggested measures are complicated and dishonest. Nobody knows how much the pension fund has grown until after 1-2 years but HMRC expects you to do a tax return way before that or you get fined to charged interest. Dishonest to say the least. Smoke and mirrors to confused people. I prefer to put my feet up as I've done enough and do not need anymore clinical risks and get poorer for helping.

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  • The gist of all of this seems to be that there is no superannuation for higher earners. Why don't they just say that and do that, then we will all know where we stand.

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  • agree with all of the above; why do I want to keep turning in , only to be paying more and more tax, taking home less than my colleagues who get paid into their llc's; who'd be a partner; hands up now; anyone; surely there's at least one, we were told that recently, ha ha ha

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